CFDs are a leveraged product and can result in losses that exceed deposits. Please ensure you fully understand how CFDs work and what their risks are, and take care to manage your exposure. CFDs are a leveraged product and can result in losses that exceed deposits. Please ensure you fully understand how CFDs work and what their risks are, and take care to manage your exposure.

BP and Shell shares could slump with oil prices steady as renewables grab market share

Shares in the two oil and gas majors are trading sideways on Thursday as oil prices find their footing above the psychological $40 mark while renewables capture a record share of the global energy market.

Shares in BP and Royal Dutch Shell are trading flat on Thursday and look likely to trend lower as oil prices find footing above the psychological $40 mark and renewables capture a record share of the global energy market amid the Covid-19 downturn.

Brent crude is 36 cents lower at $43.93 a barrel at the time of publication, with the US West Texas Intermediate (WTI) down 38 cents to $41.52 a barrel.

BP is trading marginally lower at 301p per share at the time of publication, while Shell is a touch higher at £12.58.

Renewable energy grabs record share of global electricity demand

The coronavirus pandemic forced OPEC+ to agree to record production cuts in an attempt to support oil prices amid weakening demand as a result of government-imposed lockdown restrictions aimed at curbing the spread of the virus.

As a consequence, interest in renewables has surged in recent months, helping to accelerate the energy transition away from fossil fuels, with oil and gas majors like BP and Shell opting to write-off billions in oil and gas assets. In fact, BP and Shell have slashed the value of their assets by a combined total of $39.5 billion.

Both companies admitted that the accounting moves were not only the result of weakening demand amid the Covid-19 crisis but also part of an acceleration in global efforts to tackle climate change, with carbon neutrality required by 2050.

However, the rapid pace of change has led to fears of a ‘disorderly transition’ from the likes of Shell CEO Ben van Beurden, who is concerned it will leave oil companies with stranded assets and investors robbed of expected returns.

This disorderly transition has seen renewables make up around 44% of power generation in the European Union in the second quarter of 2020, up from 37.2% in the same period last year, according to a report by Reuters.

‘We are seeing figures we weren’t expecting to see for another 10 years,’ Matti Rautkivi, director of strategy and business development at Finnish energy tech group Wartsila, told Reuters.

Brent pushing higher after retracement into recent resistance

As expected, the recent pullback in Brent crude did manage to respect the breakout level of $43.91 to break higher once more, with the recent high of $45.01 now looking to come into play as resistance, according to Josh Mahony, senior market analyst at IG.

‘A break through that level continues the uptrend, pointing towards further upside to come from here,’ he added. ‘To the downside, a decline below $44.31 would raise questions over another potential short-term retracement starting to emerge.’

How to trade stocks with IG

Looking to trade the BP, Shell and other stocks? Open a live or demo account with IG and buy (long) or sell (short) shares using derivatives like CFDs in a few easy steps:

  1. Create an IG trading account or log in to your existing account
  2. Enter ‘BP’ in the search bar and select it
  3. Choose your position size
  4. Click on ‘buy’ or ‘sell’ in the deal ticket
  5. Confirm the trade

This information has been prepared by IG, a trading name of IG Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
CFDs are a leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your initial deposit, so please ensure that you fully understand the risks involved.

Act on share opportunities today

Go long or short on thousands of international stocks with CFDs.

  • Get full exposure for a comparatively small deposit
  • Trade on spreads from just 0.1%
  • Get greater order book visibility with direct market access

See opportunity on a stock?

Try a risk-free trade in your demo account, and see whether you’re on to something.

  • Log in to your demo
  • Try a risk-free trade
  • See whether your hunch pays off

See opportunity on a stock?

Don’t miss your chance – upgrade to a live account to take advantage.

  • Trade a huge range of popular stocks
  • Analyse and deal seamlessly on fast, intuitive charts
  • See and react to breaking news in-platform

See opportunity on a stock?

Don’t miss your chance. Log in to take advantage while conditions prevail.

Live prices on most popular markets

  • Forex
  • Shares
  • Indices

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.

Plan your trading week

Get the week’s market-moving news sent directly to your inbox every Friday. The Week Ahead gives you a full calendar of upcoming economic events, as well as commentary from our expert analysts on the key markets to watch.

For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.